Chit Chat Stocks - Buck Hartzell | Boston Omaha (BOMN)

Episode Date: December 21, 2020

On the 21st day of Christmas Buck Hartzell gives to you, Boston Omaha the mini Berkshire. Boston Omaha is often referred to as a mini Berkshire Hathaway because they are also a holding company for many different subsidiaries. Buck Hartzell dives into some of their new business as well as why he thinks the company can continue into the future. Visit our website: https://www.chitchatmoney.com/ Subscribe to 7 Investing with the code "CCM": https://7investing.com/subscribe/ Follow Chit Chat Money on Twitter: https://twitter.com/chitchatmoney Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to 25 Stocks of Christmas, presented by Chit Chat Money. Today, we have Buck Hartzell on the show, and we're talking Boston, Omaha. Fun discussion. They do a lot, so we tried to cover a range of areas. It's the quote, baby Berkshire. So it's not really like in any industry, but they're a mini conglomerate, you might say. Before we get to the interview, we have our sales pitch, as always. Our friends at 7investing, they are offering you the deal of a lifetime.

you get ten dollars off your first month if you use the code ccm so it's seven dollars you get seven picks from seven great analysts two of them are they always have picks that are way over our heads so it's nice it's nice to mix it up every month yeah mixing it up with the biotech stuff from manisha and max so and then as always you guys know probably what the rest of the analysts give but they're always interested as well but it's code ccm for ten dollars off there you go Welcome to Chit Chat Money. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investment. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are not financial advisors. Anything

discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or a recommendation. Now, please enjoy this episode. Today, we are welcomed by Buck Hartzell. I met Buck at The Fool this summer. He taught us how to look at proxies, Ian and I. Most listeners know who Ian is as well. So, Buck, you're talking Boston, Omaha today, but it's your first time on the show. So, welcome to Chit Chat Money. Thank you for having me, Brett and Ryan. I appreciate it. It's great to be here. Okay. How did you come across Boston, Omaha? And then also, why did you decide that you wanted to talk about Boston Omaha for this discussion? Yeah, good, good question. So first of all,

how I found them, I guess it's kind of an interesting thing. It was a company that I read about, didn't know that much about it. And so kind of one of the things that I like to do is sometimes buy a few shares of a company. And I realized they were having their annual meeting up in Boston in a few months. So I bought a few shares and jumped on a plane and decided to go up beautiful spring day and check out their annual meeting, Boston Home Hall, which was kind of interesting in itself. They don't really have offices up there. They didn't at the time. And they met in the Life is Good headquarters up there in the Boston Harbor, which is a really cool building. Reminded me a lot of The Motley Fool and kind of what that's like. Yeah, so I

went there and spent a couple hours, got to know, you know, the co-CEOs and co-founders, Adam and Alex. And I was pretty impressed. I was pretty impressed with what I found. And I had a couple questions for them. And so that kind of got me interested in them. So following along and then just went up and checked out the annual meeting, see how they were. Okay. And we were just talking before we hit record about sort of your preference towards small cap right now. Do you want to talk about why that is? Yeah. So, I mean, we've had several years here where large cap growth has been in favor, right, in a big way. And we've seen stocks get a lot more expensive. And I think I gave a couple examples there. One way I kind of look at the market from time to time is look

at price to sales of S&P 500 firms. One of our posters on the boards at the Motley Fool actually wrote down some numbers for us here a little while ago. And I thought it was kind of interesting. So he excludes the financial companies. And the average price to sales for the S&P 500 other companies is about 1.56 since 1997. So about one and a half times sales. And the reason you use sales is they aren't as volatile as earnings, right? Earnings can have a bad year and they go zero or negative or whatever. But sales are a pretty steady number to compare over time. On the peak day for the tech bubble, if we go back to the late 1990s, it was 1.6, went up to 1.8 at the credit bubble around 2008. It crossed two for the first time in US history

in 2013. Today's figure, and this is September, back to September 20, 2020, was 3.2. What we've seen is almost a doubling of what the averages are for price to sales for companies. You don't have to look too far to see some of those companies and some of the multiples. We've had, I guess, the two most recent examples are DoorDash and Airbnb. I think Airbnb borrowed money in April at an $18 billion valuation. And I think they went public the day of their public, I think they went over $100 billion. So that's almost, you know, tenfold increase in a few months there. And trading at high multiples, right, to sales to everything. So yes, there's a lot of kind of large cap companies. And some of those are, you know, considered very growth

companies and they're trading a really high multiple so my my idea today was let's go to the small cap world let's go a little small cap value and uh i think we have some value in boston omaha so that's that's why i chose small cap staying away from the high growth growthy world a little bit here okay and i guess one more question on small cap do you think it's important that you know maybe a company like boston omaha has like one or two analysts on it compared to the fang names that might have like 80 where there there's an opportunity for mispricing. Yeah. And I don't, I don't even think it's so much,

I like it when companies aren't covered as much. So I think that's an advantage. I think the bigger thing is they're small enough where there's not a whole lot of institutional ownership yet, Brett. Cause once companies reach a certain threshold, that's when all the institutional money starts to jump in. And that's one of the things with like, you know, had some information here on Snowflake and other kind of like recent IPO darling that came out of

the $74 billion market cap. When they come out, it used to be in the early days, I mean, like 20 years ago or so, IPOs were kind of smaller price and you kind of have time to see how they did. Now they're coming out because they've been private for so long and they've taken so much venture capital. And when these companies are coming public, they're already $70 billion businesses. So I think there's an advantage for going to small cap world if you think they're well run, and they can grow. Yep, eventually, more institutional ownership will come along. Okay, so what does Boston Omaha do? I know people describe them as, you know, quote, baby Berkshire. But that doesn't really give any, you know, insight into actually what the company

is. Can you describe what this kind of mini conglomerate does? Sure. Yeah, they are a mini conglomerate, right? You know, I'd say, when it comes down to the people, the two most important people at Boston Omaha are the co CEOs and co founders. um adam uh peterson and alex rosek so these two guys were investors and uh they didn't know each other and a bunch of people said hey do you know each other and eventually they got together because i think they were the second and third largest shareholders of a company that they had in common and alex uh went and met adam and they hit it off right away and they started talking about some of the investments that they've made they each ran hedge funds and they found that

Sometimes when they talked to companies, they didn't listen to some of the suggestions they had. And eventually led to a discussion about what would happen if we started our own company. And so that led to a bunch of other discussions and ultimately to Boston Omaha, I think, in 2015. So they launched the company. The idea was to create an investment vehicle. And we can kind of already see that, you know, for a small cap company that's around six hundred million dollars. and by the way has about 30 of their assets in cash um that they've already made a lot of investments they've been busy folks um and two of their larger wholly owned companies are operating the insurance segment and billboards uh the kind that you drive by like the static billboards not

the big digital ones that you see in like times square these are kind of static billboards you'd see along any major highway and uh those are two of their major wholly owned companies they've recently bought another company that lays fiber optic cable to the home, which is a kind of a nice spot to be in right now. And then they've made some minority investments in private companies, and they also invest in stocks. So that's a long way of saying these guys are essentially an investment vehicle. And with these two guys, Alex and Adam allocating that capital. Yeah, it sounds like it's really a bet on management's capital allocation skills. So I guess, what do you think of management? I know you've met Adam and Alex. You know,

do you like them uh just general thoughts on management sure yeah i mean um you know adam has run magnolia partners um for quite a long time i think the last probably 15 years or so i think he's averaged about 20 a year which is pretty remarkable so he's done really well um alex has run a boulder auto he recently kind of closed that to outside investors and only manages kind of family money in there anymore. His track record wasn't as quite as good as Adam's was. But these guys understand capital allocation. They're definitely students of the game. And it doesn't mean that they won't make mistakes along the way, but they're really thorough. I think they're really smart and they're very aligned with shareholders. They're the two

largest shareholders. It's the biggest holding in each of their respective investment partnerships. They have a lot of skin in the game. And, you know, in the past, whenever the company, also known as raised capital and sold stock, they've sold equity several times along the way to raise capital for the different deals that they are doing. They've bought on each of those occasions, along with everyone else at the market price, right? So this is not like a tech company where they're just issuing stock options and stock to themselves.

They've actually bought alongside of us. So they're very aligned leaders in the company, too. OK, and what what criteria do they have for, you know, what businesses they either want to take a majority or minority stake in? I know that the insurance operation is kind of important to generate that float. But do they you know that they're in the billboard business, they're in fiber optic. Do they have any themes or is it really just we're trying to find stuff at the right size that will have strong returns on invested capital? yeah i think they're looking for really good businesses um and they're looking to pay a fair price for those businesses and under that i don't think there's a big theme even with the insurance

business there's a little bit but there's not a significant amount of float involved in that business um there is some and they manage that um the excess capital for generally a demony group uh gig is what they call it um so yeah but there's not a grand plan as far as like we are going into this sector next. I'd say some of the common themes of the investments that they've made so far, being billboards, insurance, are they're good businesses, they're recurring revenue, they're pretty high gross margin businesses. And the other thing is, they don't need a ton of capital expenditures to maintain those. So once you have a billboard, you have some metal, you have some vinyl, right? But there's not much in the way of capital expenditures that you may

need to make each year in order to keep those billboards paying out more and more money. They've invested more money into the insurance business, but they were only licensed in around eight states originally. They've now made that the entire country and Washington, D.C. That took some investment on their part, and they're investing a lot in technology to scale that business. But it's good. And then fiber to the home is similar to those, except for it's a pretty large upfront capital investment in laying the fiber. But once you've laid that, it's high recurring revenue streams at very high margins. And we've seen already with a couple quarters under our belt that that's a good business to be in. So what I would expect from

all those businesses when you kind of add it up is a business that you probably want to pay more attention to cash flows than you do reported earnings because of depreciation and amortization charges and that kind of stuff um current earnings probably won't be all that high but we should see cash flows and all those things moving in the right direction so it's good businesses good returns on capital but no grand plan okay and where are they laying the fiber optic cable is it just in omaha or is that sort of no that's good question so that was airbeam and they're in arizona uh which is uh for those of you that follow other companies i mean this is kind of I think people have called it a once-in-a-hundred-year opportunity, and certainly the COVID-19 outbreak over the last year has accelerated that opportunity.

Unfortunately, it's labor-intensive to lay fiber optic cable, but I think in the place they are in Arizona right now, and I'm sure they'll be in other spots as well, is a pretty good one. For those that have taken on, you know, cold weather climates in Colorado and that kind of stuff, doing work and digging and running cables and stuff in January is not awesome. But in Arizona, it's pretty nice year round. And a lot of the costs that go into fiber optic cable and stuff that are lower in Arizona than they are in typical big cities and that kind of thing. so they should be able to cost of and by the way i should mention these guys aren't competing with the likes of like at&t and things like that or comcast they're going into smaller towns where the option um they don't have another option at high speed um internet um so as a result you see adoption go pretty quickly they're smaller towns but that's okay okay then yeah it looks

like there's a lot of runway for reinvestment for fiber um sure the i guess we got to get to the crux of why you like boston almaz and investment um are there any few factors is it really just about management um are you know have they indicated what types of industries they're going to go into i guess we already answered a little bit about that question but i think the confusing thing that people get around with boston almaz why invest in this company are you just like betting that these guys will just be strong capital allocators or is there something else there? Yeah, I mean, that's it, right? Like, I think, you know, when you get into an early stage company that hasn't been public that long,

the nice thing is this one has a good balance sheet. We already said, you know, around a $620 million market cap, but has almost $200 million in cash. That doesn't count the investments that they've made in public facing stocks, which are probably worth another $50 to $60 million. So a huge chunk of that balance sheet is in liquid securities or cash. And the other thing I think is we've seen really good progress with their main businesses. So I think there's, at least initially, this is not a guarantee of success. As they say, if you want a guarantee, get a toaster, right? There's no guarantees in investing.

But the things that I like about it, I do like the people that are running it. I like how they're aligned with other shareholders. I like the investments that they've made and how progress has been made so far. and so with the capital that they have and the environment that we're in i think there's going to be some rough roads ahead from time to time and i think these guys are going to be one of those companies that provides capital to people when they need it and you usually get paid pretty well when you do that so and there's another uh oh go ahead yeah i think it'll be a good company and it's one where i don't care so much you know quarter to quarter for sure or even year to year

but this is a company i think it's early stage enough where you know you check in this with this thing every two years or three years and you're going to be kind of impressed with you know how much progress they've made and are you when you're checking in like uh let's say you're sort of uh looking at it on a three-year rolling basis or something like that is it mostly book value that you're paying attention to assets i mean you said the earnings can be somewhat lumpy uh yeah attention to i'd say i look at cash flows right now i think you know book value makes sense to look at from this company. The problem with it is it's a little bit complicated because they've done a decent amount of equity raises. And those equity raises, for the most part, though we had

one instance this past year where it was at a lower price, they've been on higher and higher prices. And I would say, so that's, I don't want to call it bogus book value, but they don't count that in their opportunity for a bonus or anything like that. It has to be real creation of book value so just selling equity at higher and higher prices doesn't really add much value what adds value is how well they they allocate that capital and so i think you know i look at it by the individual wholly owned companies that they have and how they perform and then it's usually cash flow on those businesses for the fiber business it'll be how much do they invest how many homes did they light up how many subscribers do they have they currently have

around 7 000 customers paying about 52 to 55 a month so we'll look at average selling price and all that stuff that you look at for fiber companies. But I think for me, cash flow statement is my first kind of look at how things are going. And then the second one is, hey, what do they buy and how they do? And I think you guys have read some of their annual letters to shareholders and that kind of stuff. They're very forthright about how each of the businesses is doing each year. So keeping tabs on how all those companies are doing. I'd say the one thing that they haven't given much disclosure on is their public equities that they've bought. So they bought some public equities during the downturn around March, April and May.

We know they've allocated capital there. They haven't disclosed what companies they are. They are over $4 billion market cap. So they're larger entities than they typically invested in their partnerships. But we don't know which companies they are. But I'm pretty comfortable with that given their track record at their various investment shops. They'll turn out to be okay over time. yeah we're looking at what you say is about 50 to 60 million dollars they should have a 13 f

maybe coming out soon if that if that approaches the uh 100 million mark correct right i would think so but they haven't had any to date and they haven't given any disclosure on what those are and they've given a reason why they said we don't want people arguing over whether they think it's a good investment or bad investment that's kind of it's what we do we'll take our lumps and their original investments there, I think they may have put 75 million in eventually over a couple different periods. At one point in time, it was worth 55 or so during the downturn. Some of that is recovered. So quarterly, we get kind of updates on those. But as you know, we're investors in stocks at The Motley Fool. And what happens in a month or two or three doesn't really bother us.

You know, equity investments are long term. So we'll get a better gauge for how those investments are going in a few years. Okay. And do you want to talk about the SPAC that they did? I mean, people saw that and I think that got a little bit of news because SPACs are really hot right now, but I think they're partnering with like Yellowstone. How does that work for Boston Omaha? Yeah. So I think this is another example of kind of the creativity. And when you invest in some of these smaller companies, these are the kind of things that they can kind of, they can do. Boston Omaha has made several minority investments. One of those is in a company called DreamFinders Homes. So they eventually put in $22 million for a 5.6%

state. So this is a pretty large company for them to invest in, around $400 million, let's say, right? They also later on bought some preferred units for them where they were paid 14% interest for those. DreamFinders has since redeemed those. And obviously, with the building that's going on and demand for single-family homes in the United States, it makes sense that they would want more capital. DreamFinders, I'm talking about. Unfortunately, Boston Omaha, if they wanted to put in a big slug of cash, and we mentioned they have about $190 million in cash on the balance sheet, they would be in danger of becoming an investment vehicle and regulated differently by the SEC. So what they opted to do for this, and I'm guessing now, I don't know for sure,

is they created the SPAC. They bring money, raise capital for it, for DreamFinders. So DreamFinders can go build more homes and make more money for the rest of us. And they all benefit. So my guess is you're going to see Boston Omaha put in a nice slug of money here. DreamFinders is going to walk away with a lot of capital so they can build more homes, which they earn really good returns on, and it's going to benefit all of us. So I think that's the plan for that SPAC. But time will tell. I think they completed it a month or so ago, and they have 15 months to kind of put that money to work. Yeah. So we'll see how that goes. But I think that's one way of showing, hey, we can create value for other companies. If you need capital in your good

business, come to us and we'll find a creative solution that works for you and for Boston and i think that's what's going to happen here this is a somewhat unrelated question but you mentioned that you obviously know adam and alex do you ever worry we've had this debate here and i might have asked you this over the summer at the fool but do you ever get hesitant to meet management because because the possibility that it clouds judgment like i know if i were to meet a big ceo i mean their job is essentially to sell their business right does it ever worry you when you when you actually know management not really um i guess you know there's two schools of that and there's not a company line so to say at the motley fool i think some people prefer meeting

managers others don't care that much um i always like to meet the people if i can and when i say meet them like hey i'm not personal friends with you know warren buffett but i've been to the annual meetings at omaha and that kind of thing um and uh so i like to see how they treat other shareholders I like to see how they behave in those kind of circumstances. I like to understand if they write the annual letter, do they have a PR person do that? I expect that they would be positive on their business and optimistic about it.

But I trust myself to kind of read through the filings and assess how well the business is doing without, you know, having them translate it for me. And I'd say from their standpoint, when you read their annual letters, I don't think they sugarcoat anything. I think they're pretty, um, pretty upfront about it. And then they give you the information and it's up to you to draw a conclusion on whether you like it or not. And it's that is an investment you'd like.

So, yeah, I would prefer to meet, meet management all the time. If I had the opportunity. Okay. I think that's all the questions we have for the first half, right? Yeah. I would just say, yeah, if you're, if you're interested in Boston, I want to definitely read those shareholder letters. They're like 20 pages or maybe a little bit more. And it kind of gives you a nice overview of what management thinks about the business.

And ticker is B-O-M-N Right Okay and we're going to hit a quick break here But on the second half we'll try to poke some holes In Buck's thesis Cox Panoramic Wi-Fi Includes advanced security To help protect all your connected devices

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welcome back in next up we have a devil's advocate most of you guys know how this goes we have our counterpoints and buck's job is to refute them my first one is around the billboard business, a concern people looking out, if you're reading the annual report, you might see this and think advertising is going primarily digital, which for a company that has billboards and rents them out to advertisers, that could be a problem and could potentially lead to less valuable advertising space. Does that seem like a concern for you at all? um not really but i think that's a good question for folks to ask right and and i would say let's first start out not with digital or not digital but let's just say billboards themselves

the advertising market is scary in some spots like i would not be investing in a company that says we're we are a magazine and we primarily sell magazine ads um i similarly wouldn't be invested in a newspaper company and selling newspaper ads. They've been disrupted by a lot of different companies and ways, including Craigslist and that kind of stuff. But billboards, the actual market is growing and it has been growing. So it's a pretty good market. It's a pretty cost-effective way to advertise. And as people drive more on the roads, they see billboards. And I think they've proven to be pretty effective means for not only brand marketing, but also direct response marketing in some cases from places. So I think

the billboard is a pretty good business. The other thing I would add is that you're not really in danger of a lot more billboards going up. These things are regulated on a local basis and on a federal basis. And it turns out not too many people want new billboards put up around them. So the number of actual billboards out there hasn't really grown at all. It's actually decreased a little bit. So I think that makes those assets a little bit more valuable as well. From the digital standpoint, as you know, these guys mostly have non-digital billboards. So they're vinyl and steel, but there is an option to upgrade those to basically digital flat screens that can change dynamically and serve up ads and do all that kind of stuff. There's been a huge

cost associated with that. And obviously those billboards don't last 50 years and need to be upgraded every off every now and then um and uh those are a little bit of a risk i think to the business but also potential opportunity depending on what areas um you are so i'd say they have the option to upgrade they do own some digital billboards but almost all of them are vinyl okay and what the billboards do you know with the fact that they're not going to be able to grow to you know tens of thousands of thousands of these billboards do you see that as something that's going to be a cash flow uh you know a recurring cash flow generator for them that they can take and invest in other businesses yeah yeah i absolutely do think that and they're getting

at the point now where they have some scale in this business so they can acquire new assets and don't really need to add more people where they have all the infrastructure and everything for managing those and and a big chunk of the cost on billboards is actually the land that you lease So I think there's a couple of ways that they can make billboards more profitable. One is obviously selling more ads and growing your network of billboards. I think that's a good way to do it. The other way to do it is to reduce your land costs. So most of those are under lease, but from time to time, you'll see that they make acquisitions.

If they can acquire those right-of-ways, then they take a cost. It's about 25% of their costs for billboards and they fix it, right? They fix that in time. It's not going to escalate and grow. And so that's a way over a long period that they'll be, I think, be able to make the billboards even more attractive and generate more cash. Okay. Yeah, that kind of hits into my next point here. You mentioned earlier that they've had to do a lot of, you know, equity raises at high prices or not necessarily high prices, but at, you know, incrementally higher prices. This is diluting the existing shareholders.

Do you see that as a risk where they may be growing the business, you know, market cap wise or book value, but in reality, the per share value isn't growing as quickly as people think? Yeah, no, I mean, it's growing. And I would say the one thing that matters most is like if you compare it to some of the technology companies, they issue a lot of shares to insiders and that kind of stuff, too. There's two things that are important about their equity raises. One is all of that cash is going to Boston Omaha. right? So they're capturing it. And then it's all about how well they can reinvest it. Secondly, they have a lot of ideas, you know, in their last capital raise, they did at a lower rate, they had been issuing stock and selling it at about $21, $22 a share. The last one they did,

it was at $16. And they said, this was largely a result of the fiber company that they bought Airbeam, and the capital that's required to lay the fiber optic cables that they're going to need to do. So that was the big emphasis there. And they said, we realize, you know, the last time that they had raised capital, they had issued some debt and that was taken on not at the company-wide level, but it was at Link Media, the billboard business, because they had bought a lot of billboards. They had never added any leverage to the business, but they borrowed about 17 or 18 million dollars. And they realized, hey, this is at a cost of whatever it is, 5% or something like that. So that was their hurdle, right? We got to beat 5%. Hopefully, they can. They invested that

mostly into publicly traded stocks. And then this next raise where they sold stock at $16, they acknowledged and were upfront about the fact that we issued stock in order to do this at $16. And the hurdle rate is not a 5% return. It's much larger for equity, though they didn't give the actual number. And I think they're cognizant of the fact that, hey, we need to earn a certain hurdle rate, whether it's 15% or whatever it is for that, I think they were confident that they'll be able to do that over the long time. And they've realized that we would rather raise capital in advance of needing it than to raise it when we need it. And so they've always been a company that's operated with a pretty large cash balance. And I agree with that. That's smart to do.

Right. I guess the, what do they say? The worst time to ask for money is when you need it. Yeah. Yeah. That's not a good time. Right. And so I think, you know, I said almost all their other raises have been at higher and higher prices and people have been willing to pay that because I think they've seen the progress of the business when they raised the $16. That was kind of during the COVID disruption. And these guys bought that fiber company for nearly $14 million and realized, hey, we're going to, one of the reasons the guy that runs it sold it to them was because they can provide capital to grow that business. He saw a lot of growth going down the road, and he's done really well. So give him the capital, and they figured, well, let's go ahead and raise it, even though maybe a little price is not exactly what we want. And they bought shares along with everyone else, so they put their own capital behind it. Yeah. Nice. What about selling?

Is there anything that could – I know you said your time horizon is pretty long on this, so what would have to happen for you to get out of your position in Boston, Omaha? Yeah, I mean, we've said it before. I mean, Alex and Adam are hugely important to this company. If they had left or parted ways or something went on with that, I would probably consider selling. I think the other thing is, if I thought that the balance sheet was over leveraged, and maybe they were taking some undue risks or bought a business that, you know, it looks like they really stretched and overpaid for what they were getting, I would be worried. other than that i think you know it's a company like give them a leash recognize that these guys have made a lot of deals they've not only bought stock they've bought you know three whole wholly owned companies they've invested in four or five other minority investments there's 242 million dollars they're buying stocks they're not going to be perfect that's okay i'm not i'm not going to care about a mistake here or there that's totally fine um but i would have to see some really bad leverage on the balance sheet or breakup of Adam and Alex or some

just really bad deals that I didn't like, but I haven't seen that, you know? Yeah. And what is one change? I guess this is another business that it's kind of tough to say what's one thing you would change because it's really a, you know, a capital allocation story, but is there anything that Boston Omaha is doing right now where say you were with management, you would recommend they do differently? No, I mean, I think, you know, of the two businesses, we've talked about billboards.

You know, the bulk of their money has been invested in billboards so far, about $220 million. And then they borrowed another $18 million off that, so that's a good chunk of money. They're getting close to where they have kind of scale there. I would say, you know, that's a company that should generate more cash than it does. Now, we're going through a period here with COVID where people haven't driven their cars nearly as much. and there's some external things that they can't control. But I would like to see that company produce a little bit more cash, and I think they're working on that.

And then on the insurance side of things, you know, I think really investing in technology is super important to do. Insurance is one of those businesses where it's kind of the old guard. You know, I think 12 of the companies in the Fortune 100 are insurers. I think on average they're maybe 125 years old or something like that. These aren't companies that have utilized technology in super effective ways. As a new, smaller startup, I think it takes a little bit more money up front, and I think they've been doing this. But I'd be willing for them to invest quite a bit in technology to create a competitive advantage there.

And then lastly, I mean, it's rolling out the fiber optic cable, and that's going to require some upfront capital. Do it as effectively and as efficiently as you can. I didn't mention that one of the minority investments we talked about, DreamFinders Homes, they build homes. And one of the things that's really an advantage to fiber companies is if you can invest in a greenfield development project, that means a brand new development, right? It's a lot cheaper to lay fiber in a development where they already are digging trenches and doing that stuff to run water and sewer and all the things that go along with that. it's a lot cheaper to put in than it is to go to an existing development and crack through and dig up people's yards and all that kind of stuff so they have a deal now with dream finders homes it says when they build a new development their provider of fiber will be airbnb oh and that's a

great deal right that's kind of a win-win it's cheaper for the fiber to go in there it makes your home a little bit more appealing when you say hey we're going in with fast you have fiber optic you know service to the internet which is hugely important to people now and so i think both of those businesses will benefit from that yeah kind of cross-selling between their own businesses and it was greenfield homes that we saw dream finders dream dream finders homes is the company that they've invested in and you know they have homes from florida up to virginia here so all up kind of like the east coast but uh yeah but but they call it greenfield projects when you're building a brand new development and that's a lot more cost effective to lay the fiber and i think uh

you know, Airbeam will benefit from new developments that they get the service from DreamFinders. So yeah, I guess that is probably a helpful entrance into new markets outside of Arizona for Airbeam, right? Yeah, absolutely. Okay. All right. I think that's all the questions we have. You got any more? I guess maybe just wrap it up with the shareholder meeting. Do they have these, you know, for anyone interested in this company, did you like the shareholder meeting? um do they do these every year um is it kind of like a smaller berkshire style you know yeah yes yes it is it's very similar you know the first one i went to in boston probably had about 50 or 60 people there and you could imagine there was a lot of overlap with kind of berkshire markel type

shareholders there um smart people that were um i think you know quality shareholders that are in it for the long term and that's another thing that i enjoyed not just meeting management meeting the other people that were invested in the company and they do it once a year and they switch the location of the annual meeting. It usually rotates, um, between Boston to Omaha. Um, Adam, uh, Peterson is in Omaha and Alex is in Boston. Um, so they kind of switched the meeting every other year. Um, for me, for Alexandria, it's kind of a pain to get to Omaha. So I have not been out there yet for an annual meeting, but, um, yeah, I'd say if you enjoy annual meetings and learning about companies and that kind of stuff um spend the money get a cheap ticket and go go watch those

guys for a couple hours and i think you'll learn a lot about their culture and what the business is about and certainly i think that those two people that sit up there and take questions for two hours from their uh shareholder base are very uh much servant leaders and i appreciate that as an investor okay well uh for any of our listeners that are interested and want to hear more from you Is there any place they can maybe see some more of your work, get in touch with you, that kind of thing? Yeah, I mean, I'm TMS Walker on the Motley Fool discussion boards. But, yeah, I'm mostly in our services. So get a full service.

Could be Canadian, could be FinTech fortunes in our U.S. services. But, yeah, that's the way to hear a lot from me. Okay, perfect. All right. We want to remind our listeners that we are not financial advisors. anything we say or discuss here on chitchat money is not formal advice or recommendation. Thank you guys for listening. We'll see you next time.